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  USURY:
  OR
  INTEREST, PREMIUM AND DISCOUNT.

  A LECTURE
  DELIVERED
  BEFORE THE STUDENTS
  OF
  CRITTENDEN’S
  Philadelphia Commercial College,

  BY
  S. H. CRITTENDEN,
  Attorney at Law,
  CONSULTING ACCOUNTANT AND PRINCIPAL.

  PHILADELPHIA:
  RINGWALT & BROWN, STEAM-POWER BOOK AND JOB PRINTERS,
  Nos. 111 & 113 SOUTH FOURTH STREET.
  1863.




  USURY:
  OR
  Interest, Premium and Discount.

  A LECTURE[A]
  DELIVERED BEFORE THE STUDENTS OF
  CRITTENDEN’S PHILADELPHIA COMMERCIAL COLLEGE,

  BY
  S. H. CRITTENDEN, ATTORNEY AT LAW,
  PRINCIPAL.


Our subject to-day is USURY.


We will first speak of this subject in its direct relation to
Book-Keeping. That is, as to its treatment under different forms, on
the Ledger, since this is in reality the phase in which it is of most
importance for us to consider it. Afterwards we will glance at the
matter in the view of utility, economy and legality.

The ledger titles which embrace this subject, are Interest, Discount
and Premium. These are all often, and indeed generally, embodied in one
account, headed Interest, yet they are radically different divisions of
the account, both in their nature and manner of computation; although
all tending to one point, when placed upon the merchant’s books, viz:
to add to his total gains or losses.

McCullock’s Commercial Dictionary has the following definitions of
Interest and Discount:

“_Interest_, is the sum paid by the borrower of a sum of money, or of
any sort of valuable produce, to the lender, for its use.”

“_Discount_, is an allowance made on account of an immediate advance of
a sum of money, not due till some future period.”

_Premium_, according to Webster’s Dictionary, is “a bounty, or
something offered or given for the loan of money, _usually_ a sum
beyond the interest.”

These definitions, though not full, will yet serve as a foundation
on which to construct an explanation that may make these terms more
easy of comprehension. You perceive that in order to apply the
definition of Interest, which I have quoted, we must look upon every
person who is indebted to another, as a borrower; that is, as having
in his possession, certain property which belongs of right to that
other person; and for retaining the use of which he must pay him an
equivalent. If you consider in this light all transactions in which
Interest is demanded and paid, this portion of the subject will perhaps
be sufficiently plain without additional comment.

It is in relation to the second division of the account that most
confusion usually arises. There are not less than three distinct
transactions, which are all included in the usual language of business
men, under the single term _Discount_. They are:

1st. When a deduction is made for payment of a note or account before
due; 2d. When a per centage is taken off from a sale, in consideration
of ready money; 3d. When money is remitted from one country to another,
at an additional expense or at a loss.

If at an expense, it is sometimes called Premium.

For illustration, under the 1st division; suppose A holds a note
against B for $500 due in four months, and B comes to-day and proffers
payment; the custom is, for A to deduct the interest on $500 for four
months, from the face of the note; and to accept the balance as payment
in full: thus considering the use of the remainder of the amount,
sufficient to compensate for the deficiency in the payment of the face
of the bill. But this is manifestly incorrect, if we take the existing
law of this State, which declares the value of the money to be but six
per cent. per annum, to be founded on just principles. For the interest
on the remainder of the note, after deducting the interest on the face
of the note therefrom, is not sufficient at the same rate per cent. to
make up the original sum. So that B, by paying thus in advance, secures
a larger rate of interest than is lawful. Yet this is the usage, and
it is an old adage, and well established, that _usage makes law_. This
is what is termed _Bank Discount_. _True Discount_, is such a sum, as,
when deducted from the original debt, the interest on the balance will
just equal the amount deducted. The method of ascertaining this is by
proportion, or, as it is called in arithmetics, _rule of three_. Thus
we would say, as the amount of $100. and interest for the given time
and rate is to the interest on $100. for the same time and rate, so
is the total sum to the amount of discount to be deducted therefrom.
Stated thus,-- 102.00 : 2.00 :: 500.00 : the answer.

2d. If C sells goods to D and within a certain limited time, usually
among the jobbing trade of our city 30 days after purchase, D pays for
them in cash, usage again allows him a deduction from the face of the
invoice of say 5 per cent. This is also _called_ Discount, but it is
not properly such. For it is only a deduction of such a proportion or
per centage of the bill, on fulfillment of certain conditions; while
Discount is reckoned with reference to time to run, as well as rate per
cent.; in fine, Discount is simple Interest paid beforehand.

3d. The term _Discount_ is also applied to that sum which is advanced
beyond or deducted from the amount of a debt, in remitting money from
one country to another.

Thus, if I wish to remit a sum of money to any foreign country, it is
needful for me to ascertain what is the difference of valuation at the
present time between money of the denominations used and ordinarily
obtainable here, and those in the country to which the remittance is
to be made. This valuation I suppose you all understand is a merely
arbitrary one, fixed at the will of the supreme power in any State, and
varying according to circumstances and the ideas of the law makers. If,
for instance, owing to the different amounts of alloy used in coining
pieces of corresponding value in different countries, there is say 5
per cent. more precious metal in the coin of that country to which I
wish to remit than in that of our own country, I must necessarily pay
this difference in addition to the original sum, in order to render
the account of my correspondent good according to the valuation in his
country. If on the other hand the intrinsic value of our coin is 5 per
cent. the greater, then one hundred dollars of our coin will pay one
hundred and five dollars of the other.

The proper term for this is _Exchange_, and if this name were
universally adopted, there would be far less of confusion in the ideas
associated with such transactions, in the minds of most persons.

We will now turn to a consideration of the peculiar nature of Interest,
or more properly Usury, and the reasons assigned for a limitation of
its rate by law. Formerly, the amount received in payment for the loan
of capital, was denominated Usury; that is to say, rent for its use and
enjoyment.

This is the correct term, for Interest is only the rent, or price paid
for the enjoyment of an object of value.

But this word has acquired an odious meaning, and is now understood to
express an illegal and oppressive rate of interest only, the milder but
less expressive term being substituted by common usage.

In earlier times, before the advantage and utility of a reserve
capital was known and appreciated, the demand of a rent for its use
by lenders, was looked upon as an abuse of power, and an oppression
towards the needy. And, more still, it seems from the accounts handed
down to us by the writers of those days, that even that frugality,
without which capital cannot be amassed, was looked upon as parsimony,
and deemed a public injury, by the populace, who looked upon all sums
not spent by the great proprietors, as lost to themselves. They could
not comprehend that money laid by, as a capital for some profitable
employment, was to all intents equally spent; and that to in a way
far more beneficial to the poor. For a laboring man is never sure of
earning a subsistence save where there is a capital in reserve for
him to work upon. This inability to understand its use gave rise to
strong prejudice against rich individuals, who do not spend their whole
income as it comes in; such a feeling still exists to a great extent:
formerly it was universal. Lenders themselves were infected by it, and
were so much ashamed of the part they were acting as to employ the most
disreputable agents in the collection of profits perfectly just, and
highly useful to society.

There have been from time to time various species and modifications of
statutes, and enactments for the promotion of public liberty, and the
advancement of happiness, both private and public.

Yet, though these ordinances have been provided in all good faith, by
the legislators, it is evident to every person who observes closely,
and compares causes and effects, that oftentimes their operation is
inefficient for the end aimed at; and often directly the reverse in
effect from the original intention of their makers. Especially, it
seems to me, is this the case in the matter of those laws relating to
Usury.

There exists almost universally, a sort of hereditary prejudice against
the very name of _Usury_. Almost every one will plead guilty to such
feelings as these: “Usury is a bad thing, and as such ought to be
prevented; Usurers are a bad sort of men, a _very_ bad sort of men, and
as such ought to be punished and suppressed.” Now, it is not wonderful
that men fall into such opinions, and become firmly grounded in them,
when they hear them handed down and repeated by those to whom they are
in the habit of looking with confidence for correct ideas.

For it cannot be expected that the mass of mankind should find leisure,
even had they the ability, to examine into the grounds of a hundredth
part of the rules and maxims which they find themselves compelled to
follow and observe. The fact is, that wherever it has been attempted to
limit the rate of Interest, or to abolish it altogether by law, there
the practice of Usury has uniformly revived. And, as might naturally
be expected, the more severe the penalties, and the more rigid their
execution, the higher the rate of interest was sure to rise. Because
the risk being so much greater, the lender must needs have a larger
premium of insurance to tempt him to incur it. It is a matter of
history, that at Rome, during the continuance of the republican form of
government the rates of interest were enormous. The simple and plain
reason of this was, that the debtors who were always plebeians, were
continually threatening their patrician creditors.

So also, in those Christian countries where Interest on loans has been
forbidden, or what is equivalent, where it has been placed by law
at so low a point as would not suffice to pay the risk of loss to a
lender, the practice has been made over almost entirely to the Jews;
while at the same time so great has been the extortion, oppression, and
humiliation to which this people were exposed that nothing short of a
very heavy rate of Interest could indemnify them for such risks and
repeated losses.

Thus in any case the ratio of the Premium of insurance, which
frequently forms the greater portion of what is called Interest, will
depend upon the degree of security presented to the lender. The greater
the risk, the higher will be the rate of Interest. When we detach from
the rate of interest all that is paid as a security to the lender
against the risk of partial or total loss of his capital, it remains to
consider that part which is purely and simply Interest: that is to say,
rent paid for the use of capital.

This is the point upon which many wise legislators have endeavored to
lay down laws as infallible guides, and many learned economists have
advocated such restrictive enactments, as even to this day obtain in
most civilized countries. The Romans seem, according to _Cato_, to
have considered an Usurer, as worse than a thief. For, says he, “Our
Ancestors, enacted in their laws, that a _thief_ should be condemned to
pay _double_, but an _Usurer_, _quadruple_.”

Even that most learned commentator on law, Sir Henry Blackstone,
pronounces that a legal limit ought to be placed to this branch of
trade.

I will quote from Blackstone, on this subject. He says, when speaking
of the general points in the contract of hiring and borrowing: [2 Com.,
p. 454,] “There is one species of this price or reward, the most usual
of any, but concerning which many good and learned men have in former
times very much perplexed themselves, and other people, by raising
doubts about its legality _in foro conscientie_.

“That is, when money is lent on a contract, to receive not only the
principal sum again, but also an increase by way of compensation for
the use; which is generally called _Interest_ by those who think it
lawful, and _Usury_ by those who do not so; for those enemies to
Interest, in general, make no distinction between that and Usury,
holding any increase of money to be indefensibly usurious. And this
they ground, as well on the prohibition of it by the law of Moses among
the Jews, as also upon what is said to be laid down by Aristotle, that
money is naturally barren, and to make it breed money is preposterous
and a perversion of the end of its institution, which was only to serve
the purposes of Exchange, and not of increase. Hence the school divines
have branded the practice of taking Interest as being contrary to the
divine law, both natural and revealed: and the canon law has proscribed
the taking any, the least, increase for the loan of money, as a mortal
sin.

“But in answer to this it hath been observed, that the Mosaical precept
was clearly a political, and not a moral precept. It only prohibited
the Jews from taking Usury from their brethren, the Jews: but in
express words, _permitted_ them to take it of a stranger; which proves
that the taking of moderate Usury, or a reward for the use, for so the
word signifies, is not _malum in se_, (a sin in itself considered,)
since it was allowed where any but an Israelite was concerned. And
as to the reason given by Aristotle, and deduced from the natural
barrenness of money, the same may with equal force be alleged of
houses, which never breed houses; and twenty other things, which nobody
doubts it is lawful to make profit of, by letting them to hire.

“And though money was originally used only for the purposes of
exchange, yet the laws of any State may be well justified in
permitting it to be turned to the purposes of profit, if the
convenience of society, (the great end for which money was invented,)
shall require it. And that the allowance of moderate Interest tends
greatly to the benefit of the public, especially in a trading country,
will appear from that generally acknowledged principle, that commerce
cannot subsist without mutual and extensive credit. Unless money,
therefore, can be borrowed, trade cannot be carried on: and if no
Premium were allowed for the hire of money, few persons would care to
lend it; or, at least, the ease of borrowing at a short warning, (which
is the life of commerce,) would be entirely at an end.

“And as to any scruples of conscience, since all other conveniences
of life may be either bought or hired, there seems to be no greater
oppression in taking a recompense or price for the hire of this, than
of any other convenience.”

For the taking of such recompense we have moreover, the very highest
authority in the words of our Saviour, who, in the parable of the
talents, censures the slothful servant in these words: “Thou wicked
and slothful servant, thou knewest that I reap where I sowed not, and
gather where I have not strewed. Thou oughtest therefore to have put my
money at the exchangers, and then at my coming I should have received
mine own _with Usury_.”

Dr. Adam Smith, in his work entitled “Wealth of Nations,” [Vol. 1,
p. 429,] published in 1776, and which has been long a text book for
political economists, says: “A capital lent at Interest may, in this
manner, be considered as an assignment from the lender to the borrower
of a certain considerable portion of the annual produce; upon condition
that the borrower in return shall, during the continuance of the loan,
annually assign to the lender a smaller portion, called the Interest;
and at the end of it a portion equally considerable with that which had
originally been assigned to him, called the repayment. Though money,
either coin, or paper, serves generally as the deed of assignment, both
to the smaller and to the more considerable portion, it is of itself
altogether different from what is assigned by it.” And again: “As such
capitals are commonly lent out, and paid back in money, they constitute
what is called the monied interest.” “In some countries the Interest of
money has been prohibited by law. But as something can everywhere be
made by the use of money, something ought everywhere to be paid for the
use of it. This regulation instead of preventing, has been found from
experience, to increase the evil of Usury; the debtor being obliged
to pay, not only for the use of the money, but for the risk which his
creditor runs by accepting a compensation for that use. He is obliged,
if one may say so, to insure his creditor from the penalties of Usury.”

“In countries where Interest is permitted, the law, in order to prevent
the extortion of Usury, generally fixes the highest rate which can
be taken without incurring a penalty. This rate ought always to be
somewhat above the lowest market price, or the price which is commonly
paid for the use of money by those who can give the most undoubted
security.”

“If this legal rate should be fixed below the lowest market rate, the
effects of this fixation must be nearly the same as those of a total
prohibition of Interest.”

“The creditor will not lend his money for less than the use of it
is worth, and the debtor must pay him for the risk which he runs by
accepting the full value of that use. If it is fixed precisely at the
lowest market price, it ruins, with honest people, who respect the laws
of their country, the credit of all those who cannot give the very best
security, and obliges them to have recourse to exorbitant usurers.”

“The legal rate, it is to be observed, though it ought to be somewhat
above, ought not to be _much_ above the lowest market rate. If the
legal rate of interest in Great Britain, for example, were fixed so
high as eight or ten per cent. the greater part of the money which was
to be lent, would be lent to prodigals and projectors, who alone would
be willing to give this high rate of Interest. Sober people, who will
give for the use of money no more than a part of what they are likely
to make by the use of it, would not venture into the competition. A
great part of the capital of the country, would thus be kept out of the
hands most likely to make a profitable and advantageous use of it, and
thrown into those most likely to waste and destroy it. Where the legal
rate of Interest, on the contrary, is fixed but a very little above the
lowest market rate, sober people are universally preferred as borrowers
to prodigals and projectors. The person who lends money gets nearly as
much Interest from the former, as he dare take from the latter, and
his money is much safer in the hands of the one set of people, than
in those of the other. A great part of the capital of the country is
thus thrown into the hands in which it is most likely to be employed
with advantage. “No law can reduce the common rate of Interest below
the lowest ordinary market rate at the time when that law is made.
Notwithstanding the edict of 1766, by which the French king attempted
to reduce the rate of Interest from five to four per cent., money
continued to be lent in France at five per cent.: the law being evaded
in several different ways.”

Puffendorf, whose treatise on the “Laws of Nature and of Nations,” was
published in England in 1710, says: “The arguments which are brought
against Usury are easily answered. It is urged that the loan of a
consumable commodity ought to be given gratis, because the loan of all
other things is so. But I answer that I have the power of granting the
use of my goods that are not consumable either gratis, or for rent:
whereof, the one is a _loan_, the other a _letting_. So what should
hinder me from granting the use of my money also, either gratis, or
for a certain recompense? When one man borrows to increase his wealth,
or improve his condition, why should another lend to him for nothing?
Nay, ’tis an unreasonable thing, when you vastly improve your fortune
with my money, not to admit me to some share of the gain. For I, in
the meantime, am debarred from making that advantage which I might
have otherwise expected, by applying it to my own use. Besides, I have
parted with something valuable, which ought therefore to be considered:
for in lieu of my money, I have only an action against your person,
which cannot be prosecuted without some trouble. It may also happen
by some accident that the debt may be lost. Nay, sometimes the debtor
must be courted and caressed, that it be not lost. And some borrow on
purpose to make their creditors dependent on them. As, the Marechal de
Rochelause, when he was taxed by Louis XIII. with taking part with the
Duke of Mayenne, pleaded in excuse, that he did not follow the Duke,
but his money: for his debt would be in a desperate condition if he did
not stick close to his debtor.

“Besides, it is not seldom that we lend to persons who are utterly
unable to pay; and therefore some are of the opinion that it would be
for the advantage of the public, to allow none but merchants to take
up money at use; for this would make the poor industrious, and force
them to frugality, who, some of them, are not afraid to pay Interest
for money to maintain their extravagancies. And monied men, rather than
let their money lie dead, would either take to merchandise themselves
or would put out their money to those who do: which would make trade
flourish to the great benefit of the commonwealth.

Grotius is of the opinion, “that the legal interest ought to be stated,
not according to the gains of the borrower, but the loss that thereby
accrues to the lender: as in buying and selling, and other contracts,
no regard is had to what the receiver may make of the commodity, but
what goes away from the seller.”

“And in this case so much goes away as every man in his own calling
might, and usually does, make of his money; allowance being made for
hazards, which in some cases are more, and in others less. With this,
I so far agree: that no man can complain, if his debtor makes a vast
and unexpected return of his money; but yet there is no doubt but I may
demand higher Interest of him that makes a very gainful trade, than I
can of another who drives a poor one.”

These are the opinions of men learned in the science of political
economy; and are entitled to weighty consideration; but it seems to me,
they do not, any of them, reach quite far enough into the subject. All
of them appeared to be fettered by the pressure of that same generally
recognized opinion to which I have before adverted.

The proposition I am inclined to favor on this much mooted point is
aptly expressed in the words of Jeremy Bentham. It is, “that no man of
ripe years, and of sound mind, acting freely, and with his eyes open,
ought to be hindered, with a view to his advantage, from making such a
bargain in the way of obtaining money, as he thinks fit, nor, (what is
a necessary consequence,) anybody hindered from supplying him, upon any
terms he thinks proper to accede to.”

There are but two definitions which can be given to Usury. One is,
taking a larger rate of Interest than the law allows; this is the
_legal_ or, _political_ definition. The other is taking more Interest
than is usual for other people to give and take; this is the _moral_
one. And now, in order that the law may touch the point, and actually
prohibit Usury, it is needful first that the law should supercede
morals, or conventional custom, and _fix_ that point.

One thing is certain, that antecedently to custom, which has grown
to be established conventionally, there could not be such a thing as
Usury. For what rate of interest is more right than another? In one
land ten per cent. is the legal and _therefore_ (as the advocates of
limitation would say) the proper rate; in an another five per cent. is
the utmost which the tender consciences of the legislators will allow.
Even in the same country, from time to time, the rates are and have
been varied as the wants of the community, the exigencies of the times,
or the whims of the legislators prompted.

It is, then, convenience which has produced whatever there is of
custom in the matter. “And what, (asks Bentham appropriately,) is
there in custom, to make it so much more deserving of observance than
convenience, which first gave it birth?”

It is convenient for me to give 8 per cent. for money. “No,” says the
law, “you shall not.” Why? “Because it is not convenient for your
neighbor to give more than 6 per cent. for it.” Can anything be more
absurd?

Then again, as to the opprobrious name. No appellation or particular
stigma of disrepute affixes to a man who being the owner of a house,
gets as high a rent for it as he can. Indeed this is the common
practice with such persons, and nobody is ashamed to do so, or
professes to do otherwise. Now, why a man who possesses money, and
takes as much as he can get for it, say 8, 10 or 12 per cent. should
be loaded with vile epithets, any more than if he had bought a house
with it, and then made the same profit from renting the house, is more
than I can see.

Another point, in which the good policy of the existing restrictive
laws upon this subject, seems doubtful, is that they operate in only
one direction. If it is wrong, and worthy of punishment, to _take_ more
than the fixed maximum of interest for the use of money, why not make
it a penal offence to _offer less_ than that amount, as well as to
accept more?

There are divers reasons given by the advocates of the laws restricting
the rates of Interest why they are beneficial and ought to be enforced.
Among these are: that they _prevent_ prodigality, and protect the poor
and simple from extortion and imposition.

As to preventing prodigality: does not every one know that so long
as a person has money, or property of any sort, with which it is
possible for him to display prodigality, no Usury laws will stop him
from expending it; and, that after his property is gone and he has no
more to expend, none are more ready to _promise_ the largest Interest,
providing he can thereby obtain additional money to spend? for what he
gets is clear gain, he having nothing to lose. This, it would seem is a
hopeless class, for whose protection or advantage to legislate.

Besides prodigals, there are three other classes, to whose benefit such
restrictive laws are supposed by their authors to insure. They are the
indigent, the rashly enterprising, and the simple. That is to say,
those whose pecuniary necessities are so pressing, as to render them
willing to pay an Interest, above the ordinary rate, rather than not
to have the money; those who from rashness, may be disposed to venture
upon the giving such a rate without duly considering the consequence;
and those whose natural carelessness combined with ignorance would lead
them to acquiesce in it.

Let us look at the conditions of these classes a few moments. Here
is a small trader we will say, whose stock in trade consists of only
a small amount of property, combined with an, as yet, perfectly
untarnished reputation for punctuality in payments. This last, all
who know anything of business, will at once admit to be the principal,
and most important item of his stock. For with such a character, no
merchant will refuse to credit him for articles needful to carry on his
business; and thus all goes well with him.

But now his carefully cherished credit is in danger. He has been
disappointed in his expectations of a ready sale for some part of his
goods, or in obtaining money promised him for a debt, and finds himself
without the means to promptly meet an obligation falling due to-morrow.

His position is such in the matter of property as not to render it
worth anybody’s while to lend him at the legal rate; in short he
cannot raise money to meet this obligation at that rate, and must do
one of two things--either lose his credit, which will ruin utterly
his prospects of making a comfortable subsistence for his family; or
he must obtain the means of saving this cherished treasure intact, by
paying somewhat more for the use of the money. We can at once see what
_he_, who has every motive and means for judging rightly in the matter,
would decide to be the wisest course, and the one nearest the path of
rectitude. As a matter of course, if he could obtain the money at a low
rate, he would not pay the higher one. But now the legislator who knows
nothing of any of these circumstances, but whose heart overflows with
prudence, and loving kindness for the poor man, steps in, and says: “It
signifies nothing; you shall not have the money, for it would be doing
you a mischief to allow you to borrow on such terms.” There might be
worse cruelty, but not easily greater folly.

Next, in regard to the ignorant and simple, for whose protection from
imposition or fraud, these laws are enacted. First, could any degree
of simplicity or want of tact be greater or more evident than that
displayed in such a case as we have just spoken of; where a legislator
could confine a man under such circumstances, to a given rate of
Interest?

Second, suppose the wisdom of the legislator to be never so much
greater than that of the individual, no matter how weak that may be,
how useless is the exertion of it in this case only, while there
remains so many other occasions where the simplicity of the sufferer
would make him the victim of injustice, and where the legislator cannot
interpose to protect him. In every day affairs, in the matter of buying
and selling, whether with money, or on credit, such persons are liable
to be overreached; and yet none have thought that for this reason, a
legal price ought to be set upon all goods, of whatever description.
Nor, supposing that even this endless undertaking were accomplished by
the legislator, would it avail anything unless he also should regulate
the exact amount of each article which each man should buy.

When matters arrive at this point, we find the person in the position
of those for whom the law provides entirely, as not being fit to take
care of themselves: such are usually denominated _idiots_.

And now, as we have considered at some length the needlessness and
inefficiency of such legislation, let us for a few moments, look at
some of its evil results.

We will speak at first of those who are by this means virtually
prohibited from obtaining money on loans. Consider for a moment, what
distress and inconvenience it would produce were the privilege of
borrowing denied to everybody. Just that inconvenience is occasioned to
those people whose security would, if they were allowed to add a little
of the rate of Interest, be sufficient to obtain the needed funds,
but is not sufficient for that purpose when such liberty is denied.
Thus the misfortune of not happening to be possessed of that amount of
property which is considered a sufficient security, is made the ground,
under such legislation, of inflicting hardships upon a man, which those
who are so fortunate as to have such security do not suffer.

The only point of distinction between the two classes, is that the
necessity of one is greater than that of the other. For were this not
the case, they would not be willing, as we have supposed, to pay more
to be rid of it.

Another ill effect, is that of rendering the terms of obtaining money
so much the worse for many whose circumstances are such that they are
not altogether precluded from obtaining it, at some rate. Those who
cannot borrow, may get what they want, so long as they have anything
to sell. But, while out of loving kindness, or other motive, the law
precludes a man from _borrowing_, upon terms too disadvantageous, it
does not forbid him from _selling_ at any, even the most ruinous rates.

Everybody knows that forced sales are attended with loss: and to this
loss an amount of Interest, which would at first seem exorbitant, would
bear but a small proportion.

When a man’s goods are taken, and sold under an execution, it is
considered a good sale if the net amount reaches two-thirds what it
would take to replace them again. In this way the kindness of the law,
costs him directly 33-1/3 per cent. at least; supposing, what is seldom
the case, that no more property was taken than just enough to satisfy
the claim. Now, if he had been permitted to hire the money at, say 12
per cent. per annum it would require nearly three years for the same
amount to accrue, as interest, while the probabilities are that he
would be able to pay off the whole debt long before the expiration of
that period.

To the laws prohibiting Usury, too, we may look, as the prime cause
of the establishment, and the strongest supporter of that branch of
business, which is ordinarily looked upon as so disreputable, and at
whose door are laid so many and grievious complaints of oppression,
&c., viz: pawn-broking:--a business based only on the unsatisfied wants
and necessities of that very class for whose protection from imposition
such laws are made.

So we might multiply cases and arguments, but perhaps sufficient has
already been said to lead those who think, to the conclusion that is
embodied in our proposition: viz: that every man ought to have the
same right to buy and sell money at a profit, as he has to do so with
merchandise or other property.


[Illustration: _CRITTENDEN’S PHILADELPHIA_

_COMMERCIAL COLLEGE._

_Established, 1844. Incorporated, 1855._]




FOOTNOTE:

[A] Entered according to Act of Congress, in the year 1863, by S.
H. Crittenden, in the Clerk’s Office of the District Court, for the
Eastern District of Pennsylvania.




TRANSCRIBER’S NOTES:


  Italicized text is surrounded by underscores: _italics_.

  Obvious typographical errors have been corrected.

  Archaic or alternate spelling has been retained from the original.